Emergent Research

EMERGENT RESEARCH is focused on better understanding the small business sector of the US and global economy.

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The authors are Steve King and Carolyn Ockels. Steve and Carolyn are partners at Emergent Research and Senior Fellows at the Society for New Communications Research. Carolyn is leading the coworking study and Steve is a member of the project team.

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November 13, 2017

Senate Republicans are turning to the gig economy for new revenue to offset their proposed tax cuts.

They are including a safe harbor provision for gig workers in their tax bill proposal (for those who are so inclined, see the section starting on page 151 of the document).

This provision would provide a relatively simple 3-part test which, if satisfied, would legally classify a gig worker as an independent contractor (the safe harbor).

Since it’s just a proposal for now, we won’t go into details on the tests.

But based on our reading of the bill, most gig platform companies would easily be able to take advantage of the safe harbor.

The reason this provision is in a tax bill is the legislation would also require gig economy platforms and other employers of gig workers to withhold income taxes on the payments they provide gig workers.

But this change would greatly reduce the legal uncertainty and risk around worker classification that exists today.

It would also give gig economy companies a legal way to provide other benefits to gig workers.

Since these workers would be safe harbored, gig economy companies could provide things like training, sick leave and even health insurance without the current legal risk of being charged with misclassification.

We expect a lot of push back on this provision from labor groups and others opposed to the gig economy.

But our overall view is this is would be a positive step for the gig economy and those who work in it. It opens the door for portable benefits and provides incentives for gig economy companies to provide them.